With the lack of regulation in many jurisdictions where binary options is traded, numerous traders have been on the receiving end of all manner of scams.
Many of these scams have been perpetrated by suitcase brokers with no defined official address, very ambiguous regulatory status and generally bad business practices. Now that binary options is being shifted away from the gaming sector and into the financial services sector, government regulatory agencies are now breathing down hard on these fly-by-night brokerages. From Cyprus to Japan to Malta, the noose is tightening.
However, goats and sheep will always flock to where there is grass and so it is not possible to completely eradicate scams in the financial markets where money is made on a daily basis. You can be sure that many scam artists are busy perfecting new strategies to keep circumventing the system put in place to stamp them out.
Here on this site, it is our duty to expose you to information about the latest binary options scams.
Retroactive Changes to Terms and Conditions
Now this is the thing. Some of the scam brokers have made quite some money cheating traders, and many of them just will not stop. They would rather make some changes to their modus operandi so as to exploit a weakness on the trader’s part to achieve their nefarious aims. One of the ways that this happens is when these scam brokers make retroactive changes to their Terms and Conditions.
What is the trader weakness exploited here? 99% of traders in the binary options market do not bother to read the initial terms and conditions under which their trading accounts were opened, and when changes are made to this document which allows the broker to manipulate the payout system or the bonus withdrawal system, traders never really know what to make of it all until there are issues down the road.
Bonus Awards
Have you wondered why many brokers never write the terms and conditions attached to the withdrawal of bonuses on the same page that their mouth-watering bonuses are written on? This is because many of them know that traders will never take their bonuses when they know what it entails. Now don’t get me wrong. Bonuses are good, but they must be used responsibly.
If you have a broker awarding a bonus and requiring you to generate 30 times the bonus amount in trade volume, you will be put in a suffocating, pressured environment to over trade your account just trying to claim the bonus for withdrawal. Read our article on how brokers make their money from the losses sustained by traders, and see how this all adds up.
Never use a bonus with stifling trade volume conditions. This is a subtle scam.
Poor Quality Software
Some brokers deliberately skew the order process so that when traders click the execute button on their platform, they are met with an error message. Naturally, the trader will try two or three more times to overcome the issue. When the dust is all settled, the trader will then see that for every click, the order was executed.
The trader is now faced with the problem of having too many positions in the market for the account size. If the trades do not end in-the-money, the losses are compounded and all the money is lost (some of which ends up with the brokers anyway).
The only way to avoid this is to use the “try before you buy” approach. Fund the account with the smallest amount of money possible and try out the order execution process.
As more scams are perpetrated, they will be exposed by us. So keep watching out for more information on this subject matter.